Average auto loan payments: What to expect in 2023 Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our mission is to help you make better financial choices by providing you with interactive financial calculators and tools as well as publishing relevant and impartial content. This allows users to conduct research and compare data for no cost – so that you can make informed financial decisions. Bankrate has partnerships with issuers including, but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Earn Money The deals that are displayed on this website are provided by companies that compensate us. This compensation can affect the way and where products appear on the site, such as, for example, the order in which they may appear within the listing categories in the event that they are not permitted by law. This applies to our loans, mortgages,, and other home lending products. However, this compensation will not influence the information we publish, or the reviews that you see on this site. We do not cover the entire universe of businesses or financial offers that may be open to you. Image Source: Getty Images/Getty Images
4 min read . Published March 07, 2023
Writer: Rebecca Betterton Written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She specializes in helping readers to navigate the details of taking out loans to purchase an automobile. The article was edited by Rhys Subitch Edited by Auto loans editor Rhys has been editing and writing for Bankrate since the end of 2021. They are passionate about helping readers to manage their finances by providing clear, well-researched facts that break down complex topics into manageable bites. The Bankrate promises
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If you have questions about money. Bankrate has the answers. Our experts have been helping you manage your money for more than four years. We continually strive to give our customers the right guidance and tools required to make it through life’s financial journey. Bankrate follows a strict standard of conduct, which means that you can be sure that our content is honest and reliable. Our award-winning editors and journalists provide honest and trustworthy content to help you make the best financial decisions. Our content produced by our editorial staff is objective, truthful, and not influenced through our sponsors. We’re transparent about the ways we’re able to bring quality information, competitive rates and useful tools for our customers by describing how we earn our money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We receive compensation for the promotion of sponsored goods and services, or by you clicking on specific links on our website. So, this compensation can affect the way, location and in what order products appear within listing categories in the event that they are not permitted by law. This is the case for our mortgage or home equity products, as well as other home loan products. Other elements, like our own website rules and whether a product is available in your region or within your personal credit score can also impact how and where products appear on this website. We strive to provide the most diverse selection of products, Bankrate does not include details about every credit or financial item or product. For many Americans, the cost to could be among the biggest hits on their pockets each month. This is not just housing costs. In the average, motorists are spending over $700 and $500 each month for new and used vehicles, respectively, according to Experian’s fourth-quarter . Insurance costs on average $2,014 annually as per . This hefty monthly expense comes on top of increases everywhere from the supermarket to the shopping mall. Therefore, the amount you spend to keep your vehicle on the road is dependent on a variety of variables including your score on credit, to the type of vehicle you choose and your loan duration — it is not a guarantee that will problems with supply and can add to the cost. If you’ve or are considering taking out a current loan it is essential to understand typical monthly payments and rates so you can be sure you’re getting the most value. Car payment statistics The average monthly car payment for new cars is $716. The monthly average car payment for cars that are used is $526. 39.5 percent of the vehicles that were that were financed during the fourth quarter of 2022 were brand new vehicles. 60.5 percent of the vehicles financed in the fourth quarter of 2022 were new vehicles. Of consumers purchasing new vehicles by 2022 80.9 decided to borrow money for their vehicle, as opposed to 85.3 per cent in 2021. The financing provided by credit unions accounted for nearly 30 percent of all auto loans during the same period. The cost of insurance for cars is approximately $168 per month. The latest loan amounts are increasing by 4.04 percent in the fourth quarter of 2022. SUVs and wagons increased financing share, hitting 60.7 percent in the fourth quarter of 2022. All-in loan balances grew 8.56 percent over the same time frame.
What is the price of an amount for a down payment on a car? One option to cut down on the more expensive than usual vehicle expenses that result in costly monthly payments is to put down the amount of . Down payment refers to the money you have or any value you get from your car trade-in or from rebates. This will help you save money before your financing even starts and will help you build your credibility with lenders. At minimum 20 percent of a new vehicle and 10 if buying used. On average, during the quarter that ended in the fourth quarter of buyers paid $6,780 for new and $3,921 for used according to . Those buying new vehicles received 30 percent more in the beginning of 2021. How much will my car loan be? Average monthly car payments are dependent on more than the cost of the car. It is determined by how much you are borrowing to finance that vehicle in order to pay off the principal amount of the loan, along with your interest rate and loan term. Average
New cars
Used cars
Monthly payment
$716
$526
Loan amount
$41,445
$27,786
Interest rate
6.07%
10.26%
The term “loan”
69.44 months
68.01 months
Monthly car payments, up to the point that the alternative data movement catch up, they serve to be your personal financial DNA and gives lenders an idea of how risky you are to risk. When you’ve got a strong credit score, you’re likely to be offered better rates. And for most, better rates will mean lower monthly costs. Credit score
New automobiles
Cars that are used
Source: Experian State of Automotive Finance Market fourth quarter 2022
781-850 (super prime)
$683
$505
661-780 (prime)
$723
$519
601-660 (nonprime)
$753
$541
From 501 to 600 (subprime)
$746
$542
300-500 (deep subprime)
$700
$524
Average car loan amount Over the past year, the cost of vehicles has increased each month. The month of January, 2023 saw used vehicles were priced at an average of $27,633 while new vehicles cost $49,388 — up from a year ago. These higher price tags mean that drivers were taking out more money to finance their vehicles. Credit score
New cars
Used cars
Source: Experian State of Automotive Finance Market fourth quarter 2022
781-850 (super prime)
$37,783
$28,183
661 to 780 (prime)
$43,001
$29,405
601 to 660 (nonprime)
$44,140
$27,719
From 501 to 600 (subprime)
$40,737
$23,636
300-500 (deep subprime)
$35,234
$20,325
Average auto loan rates The trick to finding the best rate available is to shop around with different lenders. Check out online lenders as well as more traditional options for banking before signing off. Credit score
New cars
Used cars
Source: Experian State of Automotive Finance Market third quarter 2022
781-850 (super prime)
4.75%
5.99%
661-780 (prime)
5.82%
7.83%
601-660 (nonprime)
8.12%
12.08%
From 501 to 600 (subprime)
10.79%
17.46%
300 to 500 (deep subprime)
13.42%
20.62%
Average auto loan terms The majority of auto loans are available in 12-month increments. The most commonly used terms are 24 to 60 months, however 72months and terms of 84 months are becoming more popular. There’s no one best term and each one is tailored to your budget and needs. A lower monthly payment means lower costs, but a higher cost overall. Credit score
New cars
Used cars
Source Experian State of Automotive Finance Market fourth quarter 2022
781 to 850 (super prime)
63.81
65.34
661 – 780 (prime)
70.99
69.04
601-660 (nonprime)
74.48
69.03
501 to 600 (subprime)
74.02
66.58
300-500 (deep subprime)
73.01
62.95
How to calculate how much your car costs In in addition to your monthly payment take into account any additional costs. These are the usual expenses such as maintenance, insurance, gas and. You should also put aside funds for unforeseeable accidents , at minimum, enough to cover your deductible. To figure out this amount prior to of signing off on an all-new vehicle it is necessary to make some estimates. Beginning with maintenance on your vehicle and Edmunds’s formula to figure out the an average cost for your car. Next, add that number to the expected insurance cost. While not every state has a requirement for it, the typical driver is expected to shell out about $168 per month. Add the estimated cost of fuel. Use your car’s average miles per gallon as well as your estimated monthly mileage along with the average cost of fuel in your region to arrive at this number. Also, consider the cost of registration, fees and taxes you’ll be required to pay, as well as the . The bottom line Although available rates for vehicle financing are affected by many variables that are beyond your control There are still alternatives you can take to be in the driver’s seat when it comes to this big purchase. Take the time to compare different rates and button up your credit score to qualify for better rates. This is especially important as consumers will be faced with cost-of-living increases across the board during the next year. The current interest rates are likely to make monthly payments more expensive therefore, be patient and think about how to cut costs in the .
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The article was written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She specializes in assisting readers with the details of borrowing money to buy a car. Edited by Rhys Subitch Edited by Auto loans editor Rhys has been editing and writing for Bankrate from late 2021. They are passionate about helping readers gain the confidence to manage their finances by providing concise, well-researched, and clear details that cut complex topics into manageable bites.
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